RFID Industry Responds to Alien Vs. Intermec

By Admin

Yesterday's announcement by Alien that it is suing Intermec caused a stir throughout the RFID market, with many surprised to see the issue of intellectual property -- widely believed to have been resolved -- back in the limelight. This article has highlights of analysis from across the industry.

This article was originally published by RFID Update.

June 2, 2006—Yesterday's announcement by Alien that it is suing Intermec caused a stir around the industry, with many surprised to see the issue of intellectual property -- widely believed to have been resolved -- back in the limelight. The suit is called a "declatory judgment" and is an attempt to resolve the question of whether Intermec's RFID intellectual property is infringed upon by Alien products. (See the actual filed complaint and IP in RFID Back at Issue as Alien Sues Intermec.) Alien of course asserts their products are free and clear; Intermec says they're wrong.

Alien's suit cites ten patents in particular, but Intermec has more than 140 related to RFID. Whether these ten cover all the intellectual property that Intermec might claim Alien infringes is unclear. Only a lawsuit by Intermec against Alien enumerating alleged infringements would answer that question. When RFID Update asked Alien vice president and general counsel David Aaron, he responded that the company does not believe any of Alien's products infringe any of Intermec's IP, but he did not answer whether there were more than ten patents that could ultimately be at issue.

Intermec, for its part, issued the following statement shortly after Alien's announcement:

"Today's action by Alien Technology is not unexpected. We continue to believe, as we stated during our last quarterly conference call on May 8, that Alien, among others, makes and sells products that infringe Intermec RFID patents. We have consistently said we will pursue those companies that infringe our intellectual property patent estate. We continue our due diligence related to these matters."

Chris Quilty, senior vice president of equity research at Raymond James, believes retaliatory action from Intermec is imminent. In a public note released yesterday entitled Let the Patent Wars Begin, he wrote "an Intermec countersuit (seeking damages) is highly likely over the next several days." Quilty echoed the sentiment of Intermec's statement, stating that legal action between the two companies is entirely predictable, but he called it surprising that Alien moved first. He speculates that the strategy is tied to Alien's forthcoming IPO, with the company "hoping to establish a more favorable venue and to control the timing of the [suit]." He continued, "An Intermec lawsuit filed in the final stages of the IPO process could prove disastrous. By firing a preemptory salvo at Intermec, Alien effectively puts the issue on the table, even if there is no potential for final resolution."

It is early yet to pick a favorite, but Quilty does believe that in the short term, "a declatory judgement in Alien's favor is highly unlikely given the scope and complexity of Alien's claims." While not attesting to the viability of Intermec's IP claims generally, he notes that certain evidence indirectly suggests the company's IP is robust and defensible. Specifically, he cites the "depth and quality" of those that participated in Intermec's Rapid Start Licensing Program, which include RFID heavyweights Symbol, Texas Instruments, Zebra, and Avery Dennison (see the full list here). Chantal Polsonetti, vice president of manufacturing advisory services at ARC Advisory Group, made a similar point, commenting that Intermec's patent pool "has so far withstood challenge as evidenced by the success of the Rapid Start program and the treatment of Intermec's patent position in both the EPCglobal and ISO RFID standardization processes."

For reference, following is a chronology of the 2005 developments around Intermec's RFID intellectual property: